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If you’re seeking tropical beaches, a high quality of life, and a lower cost of living, you’d be hard-pressed to find a better place to live than Indonesia. Home to expat hotspots like Bali and Java, Indonesia offers everything from major cities, ancient ruins, health and wellness retreats, and nature preserves. Of course, before moving, it’s worth researching Indonesian taxes first.
We know how complex it can be to find comprehensive and reliable yet digestible international tax information. So as a dedicated tax firm for Americans abroad, we’ve put together a brief Indonesia tax guide for Americans living in this expat hub in Southeast Asia.
Read on to learn how a move to Indonesia will affect your US taxes, what taxes you’ll face in Indonesia, how to reduce your tax bill, and much more.
Snapshot of taxes for Americans living in Indonesia
- Primary tax form(s): Form 1770
- Tax deadline: March 31st (individuals); last day of the fourth month after fiscal year end (businesses)
- Reporting website: DJP online portal
- Administrative language(s): Bahasa Indonesia
- Indonesia-US tax treaty? Yes
- Indonesia-US totalization agreement? No
Understanding Indonesia’s tax system & deadlines
Indonesia’s governing tax body is the Direktorat Jenderal Pajak, or DJP. In English, this translates to the Directorate General of Taxes, or DGT. This department is responsible for developing tax regulations and guidelines, implementing and administering tax policy, providing taxpayer education and services, and overseeing tax collection and enforcement.
In Indonesia, the following groups must file tax returns:
- Tax residents
- Non-tax residents who operate a business or conduct business activity through a permanent establishment in Indonesia
- Anyone with Indonesia-source income that doesn’t result from business operations (e.g. dividends, royalties, rental income)
Even if you don’t fall into any of these categories, though, you may choose to file an Indonesian tax return to claim a refund or take advantage of tax relief the government offers.
Like in the US, taxpayers in Indonesia must determine their own tax obligations and file accordingly. Before you can file, however, you must request a Taxpayer Identification Number (NPWP) from the DJP. Most American expats who live in Indonesia file their taxes with the help of an Indonesian tax specialist or through the DJP’s online portal.
For individuals, tax returns are due at the end of the third month after the tax period. Since Indonesia’s tax year is the same as the calendar year, the due date is typically March 31st.
For businesses, tax returns are due at the end of the fourth month after the fiscal year-end. That means businesses that operate on a calendar-year basis must file by April 30th. However, the due date varies for businesses that operate on a different fiscal calendar.
Determining Indonesian tax residency
Indonesia defines tax residents as those who:
- Reside in Indonesia
- Are present in Indonesia for more than 183 days in any 12-month period
- Enter Indonesia during the tax year with the intention to stay
- Note: Indonesia typically considers those applying for a visa that lasts more than six months, a work permit, or a permanent stay permit to fall into this category.
Indonesian citizens who spend less than 183 days in a 12-month period in the country may qualify as non-residents in certain circumstances. For example, those whose permanent home, center of vital interests, habitual abode, or tax home is located outside Indonesia generally do not count as tax residents.
Indonesian tax residents are generally subject to taxation on their worldwide income, while non-tax residents are subject to Indonesian taxes only on income sourced from Indonesia.
Foreign nationals who become tax residents and meet certain skill requirements may only be subject to Indonesian taxes on Indonesian-source income for the first four years of their residence. In this situation, though, they may not claim benefits of any tax treaty their home country has with Indonesia.
Taxation of income in Indonesia
Tax residents
Indonesian tax rates are marginal and progressive, meaning a) different tax rates apply to different bands of income and b) the higher you earn, the higher your tax rate. Below are the current tax rates on ordinary earned income for the 2024 tax year:
Indonesia tax rates, 2024
| Income (IDR) | Income (USD) | Tax rate |
| Up to Rp60 million | Up to ~$3,746 | 5% |
| Rp60 million – Rp250 million | ~$3,746 – ~$15,606 | 15% |
| Rp250 million – Rp500 million | ~$15,606 – ~$31,213 | 25% |
| Rp500 million – Rp5 billion | ~$31,213 – ~$312,127 | 30% |
| Above Rp5 billion | Above ~$312,127 | 35% |
Some types of earned income are taxed distinctly, however, including:
- Severance payments: 0% to 25%, depending on value
- Lump-sum pension payments: 0% or 5%, depending on value
- Dividend income: 10% if from an Indonesian LLC
- Note: Funds reinvested in Indonesia within a certain period may be tax-exempt
- Interest income: 10% to 20%, depending on type
- Rental income: 10% for land/building rentals, 2% for other types of rentals
- Lottery winnings: 25%
Non-tax residents
Non-tax residents in Indonesia pay a flat rate of 20% in withholding taxes on any kind of Indonesian-sourced income unless an income tax treaty specifies otherwise.
Deductions & allowances
Tax residents of Indonesia can claim a variety of allowances and deductions, including:
- 5% of occupational expenses up to IDR 6,000,000 (~$374) per year
- Contributions to the national old age security savings program up to 2% of gross income
- Pension contributions (1% of gross income, up to IDR 10,042,300 or about $627 per year)
- Certain charitable reductions
- Certain religious contributions/alms
- Expenses associated with operating a business
- Certain business losses
In addition, Indonesia offers several personal allowances:
- Individual: IDR 54,000,000 (~$3,369)
- Spouse: IDR 4,500,000 (~$281)
- Dependents: IDR 4,500,000 (~$281) each, up to three
Other taxes in Indonesia
Capital gains taxes
Gains from the sale of assets in Indonesia are generally subject to ordinary income tax rates. There are a few exceptions, however:
- Gains from the sale of shares on the Indonesian stock exchange are subject to a .1% tax
- Founders pay .5% of the market price of their shares upon an IPO
- Gains from the sale of land or property are subject to a 2.5% tax
- Tax residents whose gains are foreign-sourced may claim Indonesian tax credits on any foreign income taxes they’ve paid
Social security taxes
There are several social security programs that both employers and employees must contribute toward:
| Employees | Employers | |
| Workers’ comp | – | 0.24% – 1.74% |
| Life insurance | – | 0.3% |
| Old age saving | 2% | 3.7% |
| Healthcare | 1% | 4% |
| Pension | 1% | 2% |
Self-employed individuals can make voluntary social security contributions as well.
Note:
The absence of a totalization agreement between the US and Indonesia means that paying social security taxes in Indonesia does not exempt Americans—especially self-employed individuals—from also paying US self-employment taxes.
Corporate taxes
Businesses in Indonesia generally pay taxes at a flat rate of 22%, with a few exceptions:
- Public companies that meet certain requirements pay a reduced rate of 19%
- Small businesses with an annual turnover of no more than IDR 50 billion (~$3,118,675) can benefit from a reduced corporate income tax rate of 11% on their first IDR 4.8 billion ($299,393) of taxable income
- Alternatively, businesses with an annual turnover of no more than IDR 4.8 billion ($299,393) can opt to pay a simplified final tax of 0.5% on their gross turnover for 3 to 7 years, depending on their business structure
Property taxes
Two of Indonesia’s primary property taxes include the:
- Pajak Bumi dan Bangunan (PBB): A tax on land and buildings levied at a rate of up to .5% on the government-determined market value
- Bea Pengalihan Hak atas Tanah dan Bangunan (BPHTB): A transfer tax on purchases of land and buildings levied at a rate of 5% of the transaction value or the government-determined market value (whichever’s greater)
VAT
Indonesia has a standard value-added tax (VAT) — aka the tax added to the sale of most goods and services — of 11%. Certain staple products and essential services are exempt from VAT. Businesses operating in Indonesia with an annual turnover of at least IDR 4.8 billion ($299,393) must collect VAT and remit it to the government.
There is also a luxury goods sales tax (LGST) of 10% to 95% on luxury goods.
Gift, inheritance, & estate taxes
Good news for expats — there are no gift, inheritance, or estate taxes in Indonesia!
US taxes for expats in Indonesia
Due to the US’s citizenship-based taxation system, all Americans are subject to US taxes — even if they live abroad. All citizens and permanent residents who earn above a certain threshold must file, and potentially pay, US taxes. In some cases, they may even need to file state taxes.
Expats receive an automatic two-month tax filing extension. For the 2024 tax year, the US expat tax deadline is June 17th, 2025. You can extend this to October 15th by filing Form 4868. That said, if you expect to owe taxes, you must make an estimated payment by April 15th to avoid late penalties.
B!T related: Are you a US Citizen Abroad Who Never Filed a Tax Return? Here’s What to Do
If you owe taxes in Indonesia, you risk having to pay taxes on the same income to two different countries. While there is a tax treaty with Indonesia and the USA that eliminates the risk of double taxation in theory, a tricky clause negates most of the benefits for Americans living there.
The good news is that you can typically avoid double taxation by leveraging one or more of the expat-specific tax breaks below.
Foreign Tax Credit (FTC)
The FTC is a tax break that gives Americans dollar-for-dollar US tax credits on the foreign income taxes they pay. Essentially, this lets you subtract the foreign income taxes you’ve paid from your US income tax bill. If you pay higher tax rates in Indonesia than the US, this typically not only erases your US tax liability, but also gives you excess tax credits to use in the future.
To be eligible for the FTC, foreign taxes must be legal, based on income, paid or accrued, and charged specifically to you. You can claim the FTC by filing Form 1116.
Foreign Earned Income Exclusion (FEIE)
The other main US expat tax break is the FEIE. The FEIE lets qualifying expats exclude a portion of their foreign earned (but not passive) income from US income taxes. For tax year 2024, you can exclude up to $126,500 from taxation. This number increases slightly each year due to inflation — in 2025, the FEIE limit increases to $130,000.
To claim the FEIE, you must meet one of two tests:
- The Physical Presence Test: Spend at least 330 days outside of the US in any 365-day period overlapping the relevant tax year
- The Bona Fide Residence Test: Be an official resident of a foreign country for at least the entire tax year. You should have documentation that proves your residence if needed, such as a residence permit, foreign income tax return, rental contract, etc.
As a bonus, passing either one of these tests also makes you eligible for the Foreign Housing Exclusion or Deduction (FHE/FHD). These tax breaks help you reduce your taxable income based on your qualifying foreign housing expenses (e.g. rent, utilities, residential parking).
You can claim the FEIE by filing Form 2555.
Reporting obligations
A move abroad can often add to or change your reporting obligations. Two of the more common reports US expats must file include the:
- Foreign Bank Account Report (FBAR): Required for Americans with foreign account holdings totaling over $10,000 at any point in the year
- Statement of Specified Foreign Assets (Form 8938): Required for expats with foreign assets valued over $200,000 on the last day of the tax year, or over $300,000 at any point during the tax year
- Note: Reporting thresholds vary depending on marital status and location
Enjoy Indonesia while Bright!Tax handles your US expat taxes
Moving to a new country is an exciting, life-changing, and busy time. When there’s already so much to do — finding new housing, familiarizing yourself with your new home, meeting new friends — the last thing you feel like doing is researching the tax implications of your move.
If you’re looking for a trusted tax partner to help you navigate US expat taxes and reduce your tax liability as much as possible, look no further than Bright!Tax. We’ve helped thousands of Americans in hundreds of countries around the world optimize their tax strategy, accurately file their tax returns, and achieve full compliance — and we’d love to help you, too.
Schedule your free 20-minute consultation today!
Resources:
- What is SPT (Tax Return) in Indonesia?
- Indonesia – Overview
- DJP (Direktorat Jenderal Pajak)
- How to File Your Individual Tax Returns in Indonesia
- Indonesia – Individual – Residence
- Indonesia – Individual – Taxes on personal income
- Indonesia – Individual – Income determination
- Indonesia – Individual – Deductions
- Indonesia – Corporate – Taxes on corporate income
- Indonesia visa
